Airbnb Becoming a Stronger Competitor to Hotel Brands

ByHoma Zaryouni ·

7 April 2014

Reports surfaced over the weekend about Airbnb and TPG coming close to reaching an agreement. The venture capital firm had offered to invest $450 million in the room exchange service at a valuation of $10 billion. To put that in perspective, the world’s largest hotel company InterContinental Hotels Group has market cap of $8.5 billion.

Back in 2012, Airbnb’s second round of venture capital valued the home rental and swap site at $2.5 billion. This round will place it not only far ahead of competitors such as HomeAway, but on a level playing field with established players such as Marriott and Hyatt.

Until now, chains such as the Four Seasons and Ritz-Carlton have denied that Airbnb would pose a threat. Hotel execs have attempted portray Airbnb as a niche vacation rental site, while they offered a service for customers from their landing to departure. Denying Airbnb’s influence will be more difficult once it rolls out other services such as airport pickup, as CEO Brian Chesky has said he plans to.

Airbnb’s growth will place a new importance on strong mobile and online hotel booking sites and brand recognition. Our 2013 Digital IQ Index: Hotels report found three-fifths of hotel brands to have efficient enterprise sites and mobile platforms, but with little differentiation. For more on how hotel brands are improving their digital strategy, stay tuned for our upcoming hotel report.